Plan to Partially Furlough Public Employees Awaits Governor’s Signature

Proposal easily clears Legislature, but Murphy has been hard to read on plan that taps new federal benefits allowing furloughed workers to offset lost wages with unemployment claims

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By John Reitmeyer

A plan that would pave the way for state and local governments in New Jersey to cut costs by partially furloughing public employees — without hitting the workers in their wallets — is now on the governor’s desk awaiting final action.

The bipartisan proposal, which builds on prior state law and also seeks to take advantage of enhanced unemployment benefits available during the COVID-19 pandemic, won overwhelming support in both houses of the Legislature on Thursday.

However, the fate of the bill remains uncertain as Murphy, a first-term Democrat, has not taken a firm position for or against the proposal since it was first introduced earlier this month.

Some lawmakers have raised concerns that the measure could end up sending even more workers into a state unemployment system that has been overwhelmed in recent weeks under a crush of new benefit claims.

But the pressure to enact the legislation may also have increased as revenue losses continue to pile up in municipalities, counties, school districts and the state itself during a pandemic that has raged for two months in New Jersey.

“We have to do everything we can to save tax dollars now to avoid a bigger budget crisis later, and this program will save hundreds of millions of dollars,” said Sen. Steve Oroho (R-Sussex), a primary sponsor of the bill.

Furloughs, not firings

New Jersey already has a “job-sharing” law designed to reduce the need for mass layoffs during times of economic downturn by offering employers — both public and private — with incentives to only reduce employee hours, including via partial furloughs.

The legislation that’s now on Murphy’s desk would enact a number of policy changes to tailor existing law to take full advantage of enhanced federal unemployment benefits that are being provided through the end of July. Those benefits, funded by the $2 trillion federal CARES Act, are providing unemployed workers with an additional $600 a week until the July deadline.

The proposed policy changes include language that would protect seniority rights and pensions for workers whose employers choose to implement a job-sharing program. The measure would also increase, from 20% to 40%, the amount of income that can be earned by workers without crimping their unemployment benefits. It also allows for precertification of unemployment benefits for workers who are scheduled to be furloughed.

For many workers, the supersized federal benefits would allow them to collect the same or better pay even as they miss time at work — with the federal government picking up a large share of the tab. In fact, the bill’s bipartisan sponsors estimate that any worker making $89,000 or less in annual salary would be kept whole or even make out better, even as they miss up to three days of work a week.

Significant savings statewide

Meanwhile, the sponsors also estimate their proposal could ultimately save as much as $750 million spread across state, local and county governments, including school districts. That’s based on an assumption that 100,000 out of a total of 400,000 public workers in New Jersey would end up being furloughed for three days each week over a three-month period. But the bill wouldn’t force any employers to furlough workers, including the state, if they choose not to.

In addition to passing unopposed in the Legislature — the margins were 80-0 in the Assembly and 36-1 in the Senate, with no abstentions — the bill has also picked up support from both business-lobbying groups and labor in recent weeks.

“Launching a statewide job-sharing furlough program is the ultimate win-win for public and private employers whose revenues have been plunging because of the coronavirus recession, and for furloughed employees who would get more money in their pockets without any loss of health or pension benefits,” said Senate President Sweeney (D-Gloucester), another primary sponsor of the bill.

The bill’s adoption on Thursday coincided with the release of the latest unemployment data by the state Department of Labor and Workforce Development that indicated 70,000 new claims for jobless benefits were filed in New Jersey last week. That helped push the total number of new claims filed since mid-March above 1 million.

While a total of $2.7 billion in unemployment payments have gone out over the past nearly two months, the Murphy administration has continued to be barraged by complaints about backlogs and other problems that New Jersey residents have faced while trying to obtain jobless benefits.

Adding claims to overworked unemployment system

Assemblywoman Holly Schepisi (R-Bergen) was among the lawmakers who raised concerns on Thursday about the potential for sending more workers into the unemployment system even as it continues to be strained by the pandemic. Schepisi said her own legislative staffers have been “essentially working as caseworkers for the Department of Labor” over the past few weeks.

Asked about the partial-furlough bill during a media briefing in Trenton last week, Murphy didn’t directly shoot down the idea, but he also didn’t offer any kind of endorsement. He said the pandemic has only heightened the importance of the services that many public workers provide in New Jersey.

“On furloughing, I would just say this: As a conceptual matter, it’s something that we’re open to,” Murphy said.

During a briefing on Thursday, Murphy also addressed his administration’s latest revised revenue forecasts, which were released late in the day on Wednesday. They include a projected budget shortfall for the remaining months of fiscal year 2020 that totals $2.75 billion, or roughly 7% of the original spending plan. For fiscal year 2021, the Murphy administration is lopping another nearly $3 billion in revenue from the revised estimate for fiscal 2020.

“Could the budget shortfall get worse? Yes,” Murphy said in response to a reporter’s question. “It could, in particular, if we stop complying (with social-distancing measures).”

A statement issued by Oroho and several other Republican senators later in the day urged Murphy — who has been seeking approval of emergency borrowing legislation — to consider enacting “reasonable spending restraints and creative nontax solutions first, as part of a more common-sense and pragmatic approach.”

“We fear the Governor is on a path of simply repeating his past irresponsible demands,” the statement said. “If he does, we will work with Senate Democrats to advance a different approach to solving the budget challenge.”

Header: Courtesy Governor Phil Murphy’s Facebook page